If you have excellent math skills and enjoy analyzing data, you may want to consider a career as an insurance underwriter. These professionals evaluate various types of risks to help their companies determine whether they should insure someone and, if so, how much the policy should cost. Their general goal is to set rates that are accurate and competitive while also yielding profits for their companies. Analytical skills, good judgment, and meticulous attention to detail are essential in this role, given the complexity and importance of underwriters’ work.
If this career seems like it could be a good fit for you, read on for more details about what insurance underwriters do, how to become one, and other helpful information.
What Does an Insurance Underwriter Do
Insurance underwriters specialize in assessing key risk factors associated with issuing policies for health, life, and homeowners’ insurance, as well as commercial liability. They collect and analyze data to predict the likelihood and amount of claim payouts over a given policy’s lifetime, and they report on the potential financial implications to their companies. Underwriters’ assessments play a vital role in determining the rates that insurers offer to their customers.
The underwriting process begins when a potential client (an individual or a company) submits an application through an insurance agent. The underwriter reviews all relevant information and calculates the cost-effectiveness of insuring each asset and individual. After evaluating the risks and estimating the policy’s impact on company profits, the underwriter either quotes a price for the insurance premium or recommends that the company deny the application.
Much of what insurance underwriters do is now automated. Underwriters use software applications to develop quotes, risk assessments, and determine premium costs, among other tasks.
Steps to Become an Insurance Underwriter
There are different paths you can take to become an insurance underwriter. If you have insurance-related work experience and strong computer skills, you may meet the qualifications for some positions in the insurance industry. Many companies require a bachelor’s degree and related certifications. However, depending on the insurance company, you may be hired as an entry-level insurance underwriter. If you have a bachelor’s degree and certification, you will be in an advantageous position to qualify and advance to senior underwriter and underwriter manager positions.
Step 1: Earn a Bachelor’s Degree
Most insurance companies require insurance underwriters to have a bachelor’s degree, preferably in a business-related field, such as an online bachelor’s in finance. Such programs provide graduates with a foundational understanding of core business concepts, including financial services, business administration, valuation, financial modeling, and allocation of financial resources.
In addition to these fundamentals, students also become familiar with principles of leadership, communication, and ethical decision-making. This preparation can help graduates enter the insurance industry as highly skilled financial professionals who are confident, persuasive, and capable of understanding complex concepts.
Step 2: Get On-the-Job Experience
Gaining relevant work experience is an important step toward becoming an insurance underwriter. While new graduates can sometimes begin working in entry-level positions in the insurance industry, it is common for employers to seek candidates who have several years’ experience.
Starting out in an entry-level position, such as an insurance policy processing clerk or a procurement clerk, can provide opportunities for recent college graduates to learn about the insurance industry and acquire skills in using insurance and financial applications. Additionally, they can develop financial skills along with analytical and reasoning abilities for understanding the complexities of insurance underwriting.
Step 3: Meet Licensing and Certification Requirements
Many insurance companies require underwriters — especially those seeking management and senior-level positions — to attain professional certifications. Underwriters must complete relevant coursework and pass exams to qualify for certifications and keep them current. The purpose of these courses is to help underwriters stay up to date on new insurance issues, emerging technologies, and regulatory updates.
Underwriters can pursue a variety of certification options. An insurance industry organization called The Institutes offers a training program for new underwriters as well as several programs for professionals with different levels of experience and specialized areas of expertise. For example, underwriters who have two or more years of experience can complete a program to become designated as a Chartered Property and Casualty Underwriter (CPCU).
The Institutes also offers certifications such as the Associate in Commercial Underwriting (AU) and Associate in Personal Insurance (API). Courses for these credentials typically take one to two years to complete.
Another industry organization, the National Association of Insurance and Financial Advisors, administers the Life Underwriter Training Council Fellow (LUTCF) designation. Underwriters with at least three years of relevant experience may seek the Chartered Life Underwriter (CLU) designation through the American College of Financial Services.
Insurance Underwriter Salaries
The median annual salary for an insurance underwriter was $69,380 in 2018, according to the U.S. Bureau of Labor Statistics. The top 10 percent of earners made more than $122,840, while the bottom 10 percent earned less than $42,260. Salaries can vary widely depending on factors including education, certifications, additional skills, and experience.
Employment Outlook for Insurance Underwriters
The BLS indicates that while automation could limit hiring in some areas of underwriting, several subfields in the insurance sector are likely to see significant growth in job opportunities for underwriters. For example, the employment of insurance underwriters in the health care and medical insurance industry is projected to increase by 15 percent between 2016 and 2026, according to the BLS. In addition, complex insurance fields like workers’ compensation or marine insurance require a level of human analytical insight that automated software cannot replicate.
Learn More About Becoming an Insurance Underwriter
The path to becoming an insurance underwriter can be rewarding and intellectually stimulating. As an expert in risk assessment and data analysis, you can play an instrumental part in helping individuals and businesses get the insurance coverage they need. Maryville University’s online bachelor’s degree in finance provides students with the financial knowledge and business skills that can prepare them to flourish in a career as an insurance underwriter.
The Balance, “What Is Insurance Underwriting?”
Investopedia, “Insurance Underwriter”
PayScale, Average Insurance Underwriter Salary